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Chancellor Jeremy Hunt has defended his economic package as “balanced”, after a think tank said it piled more pressure on “squeezed” middle earners. <\/b><\/p>\n<\/div>\n<\/div>\n\n
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The Resolution Foundation said freezing tax thresholds hit those on middle incomes as well as the richest. <\/p>\n<\/div>\n<\/div>\n
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But Mr Hunt said it was not possible to raise \u00a325bn of taxes by focusing on a very small group of rich people. <\/p>\n<\/div>\n<\/div>\n
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The UK is facing its biggest drop in living standards on record, as the soaring cost of living eats into wages.<\/p>\n<\/div>\n<\/div>\n
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The government’s independent forecaster, the Office for Budget Responsibility (OBR), said the tax burden would rise to its highest level since the end of World War Two as a result of the plans set out in the chancellor’s Autumn Statement on Thursday. <\/p>\n<\/div>\n<\/div>\n
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It also said, once rising prices are taken into account, household income would fall by 7% over the next 18 months.<\/p>\n<\/div>\n<\/div>\n
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Appearing on BBC Radio 4’s Today programme, Mr Hunt denied his plans amounted to a raid on millions of working people, saying they asked “people who have more to contribute more”. <\/p>\n<\/div>\n<\/div>\n
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“We want to take these difficult decisions in a fair way,” he said, adding that the most vulnerable people and public services would be protected. <\/p>\n<\/div>\n<\/div>\n
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\n- Live updates: Hunt denies tax rises amount to a raid on working people<\/li>\n
- Will Tory fortunes prosper under Hunt’s plans?<\/li>\n
- Autumn Statement 2022: Key points at-a-glance<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<\/div>\n
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The Resolution Foundation said increasing benefits in line with inflation would make a “huge difference” to those on low-to-middle incomes. <\/p>\n<\/div>\n<\/div>\n
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However, it said making energy support less generous from April would mean households were “far more exposed” to rising bills. <\/p>\n<\/div>\n<\/div>\n
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For a typical household, annual energy bills will rise to around \u00a33,000, up from the current level of \u00a32,500. <\/p>\n<\/div>\n<\/div>\n
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The Resolution Foundation said the focus on “stealth taxes” – freezing tax thresholds to raise revenue – meant those on middle incomes were being squeezed as well as higher earners. <\/p>\n<\/div>\n<\/div>\n
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Threshold freezes mean that a pay rise is more likely to drag someone into a higher tax threshold. <\/p>\n<\/div>\n<\/div>\n
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In the next two years, before the next general election is due, there will be further support for households and extra money for schools, the NHS and social care in England.<\/p>\n<\/div>\n<\/div>\n
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But after 2025 spending cuts are set to kick in for many departments.<\/p>\n<\/div>\n<\/div>\n
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Mr Hunt denied he had put off difficult decisions, arguing that during a recession it was important to support the economy. <\/p>\n<\/div>\n<\/div>\n
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Among the key measures in his statement were:<\/p>\n<\/div>\n<\/div>\n
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\n- Tax thresholds will be frozen until April 2028, meaning millions will pay more tax <\/li>\n
- Spending on public services in England will rise more slowly than planned – with some departments facing cuts after the next election<\/li>\n
- The state pensions triple lock will be kept, meaning pensioners will see a 10.1% rise in weekly payments, in line with inflation<\/li>\n
- The household energy price guarantee has been extended for one year beyond April but made less generous<\/li>\n
- There will be additional cost-of-living payments for the “most vulnerable”, with \u00a3900 for those on benefits, and \u00a3300 for pensioners<\/li>\n
- The top 45% additional rate of income tax will be paid on earnings over \u00a3125,140, instead of \u00a3150,000<\/li>\n
- UK minimum wage for people over 23 to increase from \u00a39.50 to \u00a310.42 an hour, with the rates also increasing for younger age groups<\/li>\n
- The windfall tax on oil and gas firms will increase from 25% to 35%, raising \u00a355bn from this year until 2028<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<\/div>\n
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The OBR said rising prices and interest rates would tip the economy into a recession “lasting just over a year”, as consumers spend less and businesses cut investment.<\/p>\n<\/div>\n<\/div>\n
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It expects the UK economy to shrink by 1.4% in 2023 before growth gradually picks up again.<\/p>\n<\/div>\n<\/div>\n